In accordance with the legislation, the departure of an employee from a permanent place of work to another place for a certain period on the order of a taxpayer is considered a business trip. Economist Anar Bayramov explained the issues related to the calculation of travel expenses.
A business trip is only the amount paid to an employee. As for the deduction of the amount of business trip from income, according to Article 109.7 of the Tax Code, the part of actual travel expenses exceeding the rate established by the relevant executive authority is not deducted from income. The norms of the Code mean both internal and external norms of doing business, approved by the Resolution No. 14 of the Cabinet of Ministers of the Republic of Azerbaijan dated January 25, 2008.
Example 1:
Let’s say an employee is sent on a 5-day business trip from Lankaran: 3 days in Baku, 2 days in the regions – 1 day in Ganja (50 manats in a hotel) and 1 day in Sheki (52 manats in a hotel). Although he stayed in Baku for 2 nights, he presented a receipt for only 1 night. The receipt indicates the cost of living at 80 manats. In this case, how much travel allowance should be paid to the employee?
The Resolution of the Cabinet of Ministers of January 25, 2008 “On the norms of travel expenses” reads: “The daily norm of travel expenses in the territory of the Republic of Azerbaijan is 90 manats in Baku, 70 manats in Ganja, Sumgayit and Nakhchivan, in other cities of the republic, regional centers, cities. 65 manats in settlements and villages. 80% of the established one-day norm of travel expenses in the territory of the Republic of Azerbaijan is the cost of a hotel. Determine that in case of failure to provide relevant supporting documents on hotel expenses during a business trip in the territory of the Republic of Azerbaijan, the one-day rate of travel expenses of 50 percent of the fixed part shall be paid for hotel expenses. “
It should be noted that in accordance with the decree No. 269 of June 20, 2018, signed by the Prime Minister of the Republic of Azerbaijan, the calculation of travel standards with the indicated amounts is carried out from July 1, 2018. Referring to the rules:
Day 1 Daily expenses in Baku – 90 manat x 20 percent = 18 manat
Hotel costs per day 1 in Baku:
90 manat x 80 percent = 72 manat
Although a check for 80 manats is provided for hotel expenses, according to the rules, it is necessary to calculate a business trip for 72 manats.
Day 2 Daily expenses in Baku – 90 manat x 20 percent – 18 manat.
Day 2 Hotel expenses in Baku:
90 manat x 80 percent x 50 percent – 36 manat
According to the rules, if an employee does not show a hotel check, he is paid 50 percent of the daily travel rate for hotel expenses.
Day 3 Daily expenses in Baku:
90 manat x 20 percent – 18 manat
The total cost of the trip to Baku will be 162 manats:
18 manats x 3 days (3-day daily expenses) + 72 manats (expenses for a hotel on the 1st day) + 36 manats (for expenses for a hotel on the 2nd day) = 162 manats.
This amount is taken into account due to the fact that on the 3rd day a receipt was submitted for the city of Ganja for 50 manat (even if the standard cost of the hotel is 56 manat (70 manat x 80 percent)).
Day 3 Daily expenses in the city of Ganja:
70 manat x 20 percent – 14 manat
The total cost of the trip to Ganja will be 64 manats:
14 manats (daily expenses for 1 day) + 50 manats (expenses for a hotel for 1 day) = 64 manats.
Day 4 Expenses at the hotel in Sheki:
65 manat x 80 percent – 52 manat
Day 5 Daily expenses in Sheki
65 manat x 20 percent – 13 manat
The total cost of the trip to Sheki is 65 manats:
13 manats (daily expenses for 1 day) + 52 manats (expenses for a hotel for 1 day) = 65 manats.
General travel expenses:
162 manats + 64 manats + 65 manats = 291 manats.
In addition, there is a difference of 8 manats (80 manats – 72 manats) between the amount of documents submitted to Baku and the amount of hotel expenses. If the management of the organization decides to pay this amount at the expense of profit, the employee must pay 299 manats (291 manats + 8 manats) for travel expenses.
No supporting documents are required for daily expenses during the trip.
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